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PA calls for abolition of 20% VAT on e-books

The Publishers Association is calling for the government to abolish the 20% VAT rate on e-books in the UK, putting pressure on chancellor of the exchequer George Osborne ahead of the Budget today (21st March) to match the zero-rating on print books for digital editions.

In a statement, the PA said it needed "urgent action" to reduce VAT rates, as the e-book market grows "exponentially". It said e-books should be treated "equally" to print books as they deliver "the same educational, cultural and social benefits".

The statement also stressed that UK e-tailers would be better able to compete with other companies operating out of countries in the EU, such as France and Luxembourg, which have bucked EU law to set VAT on e-books at 5% and 3% respectively.

The Booksellers Association has also campaigned against the differential rates of VAT that, since the beginning of the year, have given Amazon, which sells e-books out of Luxembourg, a competitive price advantage over other e-booksellers.

PA chief executive Richard Mollet said: "The Publishers Association contends that there is an extremely strong case to make for reducing VAT rates on e-books and align them with the zero-rate enjoyed by print books in this country. Other countries have already reduced their e-book VAT rates, and we believe the UK could and should follow suit."

In 2015 an EU directive will reverse how VAT is applied on e-books, meaning that the supplying company will have to apply the rate of the country where the customer is based, similar to how it operates for physical products.

But Mollet added: "Waiting until 2015 when changes to the VAT regime will be implemented is far too late for our British e-book retailers. If government won't take action now, we urge them to support us in Europe to amend the VAT Directive so that we can all enjoy the benefits of reduced rates on e-books."
 

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It's vital for this VAT rate to be reduced as it causes all sorts of complications. When we register our ebooks to be retailed on ereaders other than Amazon's Kindle, they have a price match clause in their contracts. This seems to be standard with various retailers and I can understand why (buyers can so easily price check too). The Amazon costs for ebooks have gone down due to their lower rate of VAT, and we have to set the same price for other retailers or they have the right to 'price match' and pay us the same price we charge on Amazon.

This means that Amazon doesn't have a price advantage. Ebook prices have to be set the same with all retailers. So publishers have a choice. Either they raise their ebook price on Amazon as they can't charge as low a price with UK retailers who have higher VAT. Or they don't sell with other retailers, which is an obstacle to competition.

We set our prices as low as we can while still making some income and paying authors royalties. This is necessary because publishers need the ebook market to take off - it helps finance the production of print books which are hard to sell. I know people will say ebook sales are eating into print book sales but I don't believe this is the case. Without ebooks the sale of print books would still be dropping rapidly due to addictive use of the internet and phones for other activities including reading and sharing writing.

Librarians are expected to treat ebooks in the same way as print books and not charge for them - they are to be offered free unlike audiobooks. To me this means the Government sees them as books and not 'electronic services' so they shouldn't have VAT charged for 'electronic services' rather than the zero rate for books.

At last!

It's vital for this VAT rate to be reduced as it causes all sorts of complications. When we register our ebooks to be retailed on ereaders other than Amazon's Kindle, they have a price match clause in their contracts. This seems to be standard with various retailers and I can understand why (buyers can so easily price check too). The Amazon costs for ebooks have gone down due to their lower rate of VAT, and we have to set the same price for other retailers or they have the right to 'price match' and pay us the same price we charge on Amazon.

This means that Amazon doesn't have a price advantage. Ebook prices have to be set the same with all retailers. So publishers have a choice. Either they raise their ebook price on Amazon as they can't charge as low a price with UK retailers who have higher VAT. Or they don't sell with other retailers, which is an obstacle to competition.

We set our prices as low as we can while still making some income and paying authors royalties. This is necessary because publishers need the ebook market to take off - it helps finance the production of print books which are hard to sell. I know people will say ebook sales are eating into print book sales but I don't believe this is the case. Without ebooks the sale of print books would still be dropping rapidly due to addictive use of the internet and phones for other activities including reading and sharing writing.

Librarians are expected to treat ebooks in the same way as print books and not charge for them - they are to be offered free unlike audiobooks. To me this means the Government sees them as books and not 'electronic services' so they shouldn't have VAT charged for 'electronic services' rather than the zero rate for books.

At last!